A new multivariate product growth model

Abstract

To examine cross-country diffusion new products, marketing researchers have to relyon a multivariate product growth model. We put forward such a model, and show thatit is a natural extension of the original Bass (1969) model. We contrast our model withcurrently in use multivariate models and we show that inference is much easier and inter-pretation is straightforward. Especially if the number of countries is larger than two. Infact, parameter estimation can be done using standard commercially available software.We illustrate the beneffits our model relative to other models in simulation experiments.These experiments show that in the competing models the cross-country effects are actu-ally very difficult o identify from the data. An application to a three-country CD salesseries shows the merits of our model in practice.Keywords: Diffusion, international marketing, econometric modelsJEL: M31, C3